“Incentive Auction Incentive Program” could eliminate need for Congressional authorization

Proving yet again that where there’s a will, there’s a way, the FCC has announced that it is proceeding with incentive auctions “promptly”. This is noteworthy, of course, because Congress still hasn’t gotten around to authorizing the sharing of auction proceeds – and the conventional wisdom has been that, without such authority, incentive auctions were a non-starter.

So much for the conventional wisdom.

As outlined in a public notice, the Commission has devised a novel work-around: an Incentive Auction Incentive Program. Instead of promising broadcasters actual cash payments from auction proceeds in return for relinquishing their spectrum, the FCC will offer its own currency, “in the form of scrip”, which can then be redeemed for various “non-cash resources” already available to the Commission.

The FCC has even come up with possible names for its scrip. While the final decision is still up in the air pending the results of “a series of focus groups”, it appears that the scrip will be referred to either as “Commi$$ion Ca$h”, “Digital Dollahz” or “Broadband Bux”.

If the broadcaster elects to hold onto its scrip in the hope that Congress may eventually allow the scrip to be redeemed for real dollars, it may do so. (There’s a catch to that, though – in a bold-face caveat, the Commission’s notice warns that the FCC cannot guarantee that Congress will in fact ever authorize the sharing of auction proceeds, or that any authorization will provide for any particular scrip-for-cash exchange rate.)

But interested broadcasters might not be overly concerned about the iffy-ness of any possible cash redemption value when they see the initial list of “Incentive Awards” available now, no questions asked. These awards reflect the Commission’s resourcefulness. They include items that:

  • the FCC has accumulated but could now easily live without (e.g., crates of DTV-to-Analog television converter boxes);
  • the FCC can create and easily reproduce (e.g., a DVD with excerpts of programming collected by the Enforcement Bureau, or how about copies of the National Broadband Plan, “autographed, with personal greeting, by all Commissioners and Blair Levin”);
  • the FCC can otherwise provide without apparent limit (e.g., personal appearances by Commission officials).

The ingenuity at work here is impressive, since the Commission has a nearly inexhaustible supply of many of the (presumably) more desirable items on the list. The opportunity to “Be An FCC Official For A Day”? Just start scheduling them in and stop when the demand dies down. Personal appearances by, say, the Chairman?   Same thing. (Note, though, that the Commission’s public notice contains a footnote suggesting that the redemption value of personal appearances will ultimately vary based not only on the position of the official but also on the nature of the appearance. What types of appearances does the FCC have in mind? Examples listed in the notice include “policy briefings, motivational speeches, photo opportunities, light housework (no windows), landscaping, dunk tanks (charitable events only).” Presumably more imaginative opportunities may be identified.)

The Commission has obviously embraced one of the oldest and most successful business models in history (“You’ve got it, you sell it, you’ve still got it.”).

This new development puts a whole new slant on the possible desirability of incentive auctions. How it will play out remains to be seen.